I have some good friends who are letting their boat go to the bank. They inquired to the bank about settling for a lower amount than they owe, which they agreed to as long as it is a cash lump sum amount. My friends said to tell them what I would offer, they will relay it to the bank, but expect a counter offer. Has anyone heard of/done this? If it's anything like a home short sale process, maybe I will hear back by next summer!

I've never heard of this being done, but if they can do it then by all means. Obviously it is a lot easier from a legal standpoint to repo a boat than it is a home. My guess is if they find it more financially beneficial to "short sale" it than to repo it they may go that route...that said banks aren't always very bright about how they handle these things (such as not paying for the electric on foreclosed homes so the sump pump doesn't run, floods the basement, mold everywhere and now a 10k investment to get the home sellable turns into 100k).

I think what Im offering is close to what they owe. So the bank would only be losing a couple thousand, but wouldn't have the hassle of repo, storage, auction, etc. Our friends have already spoken to the bank who gave a range of what they would accept. We'll see, fingers crossed, but my hopes aren't up!

I bet it can be a lot in some cases. There are plenty of people who overpay and then finance almost the entire purchase. With 6 digit prices I bet there are people who are 10K plus underwater. If you can't afford to make the payments then you can't afford to pay the 10K loss.

That's what got us into this financial mess. People need to take responsibilities for their actions and stop looking for handouts. Don't buy a new boat if you can't afford one. Buy a used one and live within your means. Someone told me you could get 30 year financing on a boat. Unbelievable.

Settlements can be made on boat loans but usually not through a third party buyer. That being said if you have a hand shake agreement to provide the settlement funds you might be able to make it work. If this is the route you take be very careful and make sure you obviously get the title work figured out. Banks will usually take X percentage of NADA value if they can come ahead or break even from the expenses involved in the repossession process. Your friends credit report will list this loan as a derogatory settlement on there bureau and they may be 1099'd on the deficiency balance of the settlement versus principal payoff.

This isn't that far-fetched of a concept. The bank will just want to minimize its loss in this case. That being said, with an item such as a boat, what the bank chooses to use to determine market value could be interesting. If they go off of what things are listed for sale at, you may have some trouble. If they use NADA, you could be golden. As for title, it's going to depend on what state you're in. Here in Illinois, boats, like cars, are titled. So, if the bank signs off on their lien on the back of the title, and your buddy signs the title, there is no issue.

Boats are like cars, tons of people are massively underwater on them. I would have almost no interest in financing a boat for someone...

It's an 02 Centurion Hurricane. Not my first choice in boats, but at the price I offered I would certainly take it. The owners bought it brand new in 2002 and still are underwater on it. The bank said they would entertain between 12-14, so I started at 11 to see what they say. Interesting process, Im not counting it on working out, but if it does than it's a great deal.

I got my first boat this way. Although the seller wasn't all that forthright in telling me so... I was naive and didn't think the seller would pull my leg when he said he owed the bank $34K but would sell to me for $31.5K and eat the difference. It was only when I called the bank six weeks or so later wanting to know why they hadn't sent my title, only to find out my seller still hadn't paid off the balance of his $44K (not 34!) loan that I found out that he was short selling.

The bank did end up approving and I got my title, but there was a night or two of cold sweats over it.

I got my first boat this way. Although the seller wasn't all that forthright in telling me so... I was naive and didn't think the seller would pull my leg when he said he owed the bank $34K but would sell to me for $31.5K and eat the difference. It was only when I called the bank six weeks or so later wanting to know why they hadn't sent my title, only to find out my seller still hadn't paid off the balance of his $44K (not 34!) loan that I found out that he was short selling.

The bank did end up approving and I got my title, but there was a night or two of cold sweats over it.

Shawn - were you involved in the process any? Did you pay the bank directly or did the seller?

I still don't see how someone could make a 20-30 year loan on a depreciating assett. The responsible thing to do would be to sell it and pay off the loan. So sick and tired of people always looking to get out of their obligations.

I knew several people had 20 year notes on boats back then. In 2009, I had trouble getting a 5 year note with a bank that I had already paid-off a boat with! Who would have ever guessed a that a 20 year loan on a boat was a bad idea...

Shawn - were you involved in the process any? Did you pay the bank directly or did the seller?

What I didn't do that I should have is communicate with the lender directly. I was smart enough to make my payment directly to the bank, but what I didn't do is (a) confirm the sellers story and (b) verify the banks willingness to actually agree to the short sale beforehand.

Any buyer getting into this kind of arrangement should contact the bank directly to verify the deal.

I know alot of people argue otherwise, but for me personally I wouldnt pay anything other than cash for a toy such as a boat...

Agreed. Paying interest on a boat is absurd. As is paying interest on a car or bike. You can get a boat that floats and goes for a few hundred bucks, same for a car or bike. Plenty of people like to pretend they're rich though. It's their money to waste but they're only making the banks rich and hurting themselves.

Seems like a weird deal or you are missing some information. I think the short sale thing could work why not, everything is up for negotiation always but I was fully expecting you to say this was a 2010 or newer boat, how after more then a decade of payments could this thing be that far underwater? What they owe and what they could sell it for have to be fairly close, have they tired to list it? I understand you wanting a good deal but why do they want to ruin their credit over a couple of grand?

I could see defaulting on it if you where 20+k underwater, but they should work with the bank to get the boat sold and maybe take out a personal loan on the difference so it doesn't hurt credit. Also if this is the same bank they happen to have their mortgage through they could run into other problems as well.

I would advise directly confirming with the bank all the information the seller (friend or not) is telling you is accurate.

LOL, I remember a thread only a few months ago where I got crap for saying that someone who needs a 15 year loan in order to afford a boat can't afford that boat. Sure seeing a lot of posts supporting that statement in this thread.

I have a loan on my new boat, but have equity and did the day i bought it. If something unforeseen happened I could sell the boat and pay off the loan. Even dump it super cheap if need be. Only way I would ever take a loan on a toy is if its far less than market value so I can liquidate it if the need arises.

I'm with Justin, last boat we paid cash for and liked it just fine. I constantly think about how nice my new boat is, I also think about the loan. I wish it was paid off.

lol... couldn't find that boat on onlyinboards.com so I went to NADA to see what it says for value. I put options on the boat that are pretty standard for most wakeboats around that era and got the following: Suggested $46k, Average list $24, Low $21.

that seems ridiculously high, even for nada, but if it is anywhere close at $24k, then I can't believe they are still underwater. But great deal for you if you get it for $11k

@Nitrous funny you mention that flooded basement issue.The house next to ours went into foreclosure.They shut electricity off.Basement flooded,mold grew everywhere and now it"s a huge fee to fix it if they can.Apparently the mold got into the foundation,walls and they may have to tear it down.It shows frequently but once buyers find this out of course they back out.It would be a $275,000.00 house but they dropped it to $205,000.00 and can"t unload it!!Sad how stupid the banks can be.

Cliff Notes: Don't buy something you can't afford, even if the Bank tells you that you can afford it. Don't look for a hand out either, take responsibility for what you signed up for and eat the loss.

Don't have the money but still really want something? Work extra hours, sell some ****, or make something then sell it. Or buy a boat that needs some TLC, then work on it and make it nice. Its not complicated.

I'm in my mid 20's and own my Epic 23V outright, first boat, paid for everything in cash. If you want to finance your toys have at it, but anything over 5 years is ridiculous.

If you absolutely must have the nicest boat out there in order to become a pro rider on the weekends or to make friends, then your retarded and might as well take a 50yr jumbo mortgage out on it so you can keep the payments down to $100/mo.

Irresponsible people helped me get a great deal on my boat and house so I'm not telling anyone to smarten up.. Keep on spending someone else's money and borrow more than you can afford so i can upgrade in a few years.

yeah but when your neighbor is irrseponsible as well and walks away from his house and your property value goes down you'll be singing another tune. People need to learn to live within their means. If you don't make enough money to buy a new one buy a used on instead. At the end of the day you will have just as much fun.

yeah but when your neighbor is irrseponsible as well and walks away from his house and your property value goes down you'll be singing another tune. People need to learn to live within their means. If you don't make enough money to buy a new one buy a used on instead. At the end of the day you will have just as much fun.

Exactly. That's why my rental property is my rental instead of a sold house. Mix of local gov't going crazy with property taxes + loads of short sales and foreclosed homes = extreme property value loss. I once had equity in the house, now it is worth a lot less than what I bought it for 11 years ago (even after fixing it up).

On the flip side, our current home was a bank owned property, got it for a steal and keeps going up in value.

For you all who are saying if you take a Loan out a boat you can't afford it are talking outta your asses! Some people finance for many different reasons and situations. Just cuz you don't wanna drop a chunk of your savings and can get a good interest rate and super low payments why not. I for one pay 4x my payment every month and can sell my boat right now for a profit while I added close to 75 points to my credit score I the last year doing so.

^^I'd have to agree with that, I don't think financing a boat is the worst thing in the world and honestly I think it makes a lot more financial sense then dropping a ton of cash on something. When you do that you are missing the opportunity for your money to go to work for you and 50-100k can do a lot of work, I'd say a fool would part with that kind of cash. Personally I think a mixture of a solid down payment and financing the rest is the way to go, there is such a thing as good debt. I look at is as using the banks money to protect my cash and in turn paying for that service in the form of interest. The problem begins when people start doing this with everything, house, boat, car, vacations, couches, tvs, cell phones, shoes ect... Leave the financing to the big ticket items and pay cash for the rest. Just my .02

DO NOT EXCHANGE MONEY UNLESS YOU GET A SIGNED LIEN RELEASE FROM THE BANK. Once you have that, you are in the clear and whatever happens is between the bank and seller, not you.

At the very least, you should be able to take a look at the loan payoff statement that the seller would request from their bank. Assuming that the amount your paying for the boat is equal to or more than that number, YOU send the bank the payoff amount and the rest goes to the seller.

That guarantees to you that the loan is paid off. Of course the seller could theoretically flake out and fail to forward along the lein release to you, but that's unlikely and in the end, with some red tape, you can find a way to get the release. The important part is that the loan is paid and your are not at risk of a repossession.

At that time, you take possession of the boat, get copies of all checks/wire transfers AND a written bill of sale signed by you both.

At the very least, you should be able to take a look at the loan payoff statement that the seller would request from their bank. Assuming that the amount your paying for the boat is equal to or more than that number, YOU send the bank the payoff amount and the rest goes to the seller.

That guarantees to you that the loan is paid off. Of course the seller could theoretically flake out and fail to forward along the lein release to you, but that's unlikely and in the end, with some red tape, you can find a way to get the release. The important part is that the loan is paid and your are not at risk of a repossession.

At that time, you take possession of the boat, get copies of all checks/wire transfers AND a written bill of sale signed by you both.

Seller is selling short. Don't leave anything to chance by just sending the bank a check. They could just apply it to the loan and not release the title. Lien release when money changes hands, or no deal.

As long as the bank will hand you a title with their lien signed off on, you're golden. Your gain very well may come at your buddy's expense. If there is debt forgiven, it will be taxable income for 2013.

Also,it's possible that this thing was pledged as collateral to secure other financing. I've seen that done before. A borrower will throw other assets out there to make up for collateral short-falls. In reality, I'd be more comfortable dealing with the bank than an individual going through financial distress.

Received a letter from the bank. They countered for $12,750. The letter is addressed to my friends (the ones settling the debt). I am an outside party. Letter states
"Please be advised our client has authorized us to offer you substantial savings to settle this account. We are authorized to settle this account for a reduced amount of $12750, which must be received on or before 4-24-13".

This offer is through a debt settlement company. The letter does not state "release of title" or "release of lien" which has me concerned. Furthermore, it is through a 3rd party debt settlement company, not direct correspondence from the lienholder (bank).

I have the rep's direct number. I plan on calling him directly to discuss the transaction. Any advice to cover my bases?

So the bank is going to take less than owed because they are afraid they won't be able to sell the boat for what is owed. The reason for this is that the boat is being paid off at a slower rate than the boat is depreciating (typical for boats). So now you are going to come along and pay more than the boat is worth so that you can take that loss instead of the bank. Tell me if I'm missing something because this sounds like the dumbest thing I've ever heard. Do you feel sorry for the bank, your broke buddy who is going to take a hit to the credit score, or are you just really desperate to get this particular boat for some odd reason?

That letter is from a debt collector. Find the statement that says "this is an attempt to collect a debt." They can and will say/do anything to collect that debt. That does not have anything to do with the bank. The bank sells the debt to the debt collector. Which means the bank has already written it off. Usually secured debt doesn't get sold like that. They usually just repo it and auction. There is nothing about title because the debt collector probably doesn't own title. Chances are you pay the 12K and that releases your buddy from his liability. Then you pay the rest to the bank if you want title. Leave it alone IMO. Once you have a third part debt collector involved it's too murky to want anything to do with.

My question is how does your buddy owe $28K on a 11 year old boat that sold around 40K new? Thats about all that boat was new. Even on a 15 year loan he'd be paid down to the 10K range. Fishy from one end to the other...IMO run away.

Then have your buddy call them and conference you in(the bank). Ask about the lien status if you pay the collector and record the conversation. If they say they will release it, leave the collector out of it and send them a certifed check. Not all collections work the same. Yes sometimes the debt is sold and written off, but not always. I deal with this stuff everyday btw.

Thanks guys. I negotiated with the collections co for a 12k settlement. I received it in writing. They were actually very helpful, and I spoke with the rep handling the account directly. I had a recorded conversation that the lien will be released by keybank within 30-40 days of receipt of payment. As Paul suggested, I called the bank directly and explained the circumstances. They independently verified that once the loan amount was settled, they would send a zero balance letter to the owner (my friend), along with a lien release. Once the debt is settled, as the letter states, the bank has to (by law) release the lien. I also requested an amendment to the letter from the collections agency stating this which I should hopefully receive.

Paul, I was by the collections agency told the debt was not sold by keybank, rather handed off for collections.

Thanks Paul, I appreciate your insight! There's some risk to this (i.e. I don't get the title), but I feel confident after speaking directly with the collections and bank. Funny how nice collections is on the phone when you have money to offer!

lol. You got that right. I re-read your above post. I thought it said 3-4 days. I would ask them for something in writing to confirm that. I have no idea why it would take that long. Once they get the money, the title should be immediately released.

DO NOT EXCHANGE MONEY UNLESS YOU GET A SIGNED LIEN RELEASE FROM THE BANK. Once you have that, you are in the clear and whatever happens is between the bank and seller, not you.

Paul, I just re-read this. You work in the industry, how would I get a signed lien release without exchanging money? Isn't that a catch 22? They aren't going to send a signed lien release on the promise of me paying I wouldn't think.

Also, am I correct in stating that, per law, the bank is required to release the lien once the debt has been settled (as with any kind of lien)? Don't worry, I'm not construing this as advice, just your professional opinion.

I was thinking you could exchange money at the bank to get the release. Wasn't till later in the thread that I learned there were no branches in your town. You are correct, that they won't release until money has been received.

They would be required if the loan was satisfied, but in this case it is not, and since there are multiple parties involved, a written statement from the bank confirming if they receive x amount of money the will release the collateral, will cover all bases.

I was thinking you could exchange money at the bank to get the release. Wasn't till later in the thread that I learned there were no branches in your town. You are correct, that they won't release until money has been received.

They would be required if the loan was satisfied, but in this case it is not, and since there are multiple parties involved, a written statement from the bank confirming if they receive x amount of money the will release the collateral, will cover all bases.

Got the letter today direct from the bank stating that once the 12,000 is received, the lien will be released immediately, thanks for all the help!

I picked up the boat last night. I attached a pic. It's been well cared for over the years, just needs some TLC (last stickered in 2011). My friend threw in his stereo (2 kicker L7's, 3 arc audio amps, tower speakers, capaciator, alpine deck), also all the ropes, bouys, detailing compounds, etc.

Heck yeah, cant find a decent 2000+ direct drive for 12k, much less an 02 v-drive, original owner! I started working on it last night, tearing it down and cleaning. Picked up some magic eraser and 303 based on forum suggestions for the interior, and some 3m 3 stage compounds for the gel coat. Need to tackle re-isntalling the stereo (friend cut it all out thinking it was being repo'd, 3 amps, 2 kicker 15" l7's, tower speakers, capaciator, etc), refinishing the swim platform, and mechanical service next.

Looks good. Like they say "proof is in the pudding", guess you will know when the title shows up.

I'm also guessing you can'y use the boat till you can transfer title as you said it hasn't been registered in a while. There is no "grace period" for boat registration.

The previous owner is taking care of the back registration so I'll have current stickers on, and Im mailing them a check. I have a bill of sale and insurance set up already; no different than any other vehicle or vessel you buy that isn't paid off. I received a letter directly from the bank stating the lien will be released immediately and the title will be sent so I'm not worried about that part.

Heck yeah, cant find a decent 2000+ direct drive for 12k, much less an 02 v-drive, original owner! I started working on it last night, tearing it down and cleaning. Picked up some magic eraser and 303 based on forum suggestions for the interior, and some 3m 3 stage compounds for the gel coat. Need to tackle re-isntalling the stereo (friend cut it all out thinking it was being repo'd, 3 amps, 2 kicker 15" l7's, tower speakers, capaciator, etc), refinishing the swim platform, and mechanical service next.

I can never figure out the mindset behind the guy who strips everything out in anticipation of the repo man. Do people not understand that the creditor will go after a debtor for the difference in the value of what they can sell the collateral for and what is owed? Then there's the fact that it borders on theft. I'm glad you got a good deal, but it sounds to me like your buddy is morally bankrupt, at best.

I can never figure out the mindset behind the guy who strips everything out in anticipation of the repo man. Do people not understand that the creditor will go after a debtor for the difference in the value of what they can sell the collateral for and what is owed? Then there's the fact that it borders on theft. I'm glad you got a good deal, but it sounds to me like your buddy is morally bankrupt, at best.

I don't know about morally bankrupt. They are small business owners, lost a house in 2010, sold their nice cars, and business is slow. Over the 12 years of the loan, the bank has more than recouped their investment plus significant interest. Anything they sell the boat for is still profit to them. My opinion is, when they signed the loan 12 years ago, they had every intention to make the full payments. They probably didn't guess that more than a decade later they would be struggling? In my opinion, its a win-win-win situation. The bank avoids a repossession of a vessel on the other side of the continent and get probably what they would fetch at auction (maybe more), the owners are forgiven the debt - SETTLEMENT (yes, forgiven, the language in the agreement with the bank is very specific), and I picked up a boat well within my price range that I wouldn't otherwise. Regarding the stereo, that is equipment (which was paid for in cash seperate from the boat) that he installed himself that was added to the boat, why wouldn't he remove it? hat's not the banks property. That is no different than removing any other personal property before repossession (wakeboards, fat sacs, etc). If he removed the engine, tower, or other items that were part of the original sale, thats different.

Last edited by fouroheight68; 04-25-2013 at 7:35 AM.
Reason: corrected

I don't have a problem with 15 year loans as long as people are responsible and pay them off. Just tired of people always claiming to be the victim. That's why they should not allow these long term loans on boatsand other toys in the first place and why you should pay cash for these toys.How the hell do you know what your financial predicament is going to be in 15 years from now and toys are not a necessity.

I don't have a problem with 15 year loans as long as people are responsible and pay them off. Just tired of people always claiming to be the victim. That's why they should not allow these long term loans on boatsand other toys in the first place and why you should pay cash for these toys.How the hell do you know what your financial predicament is going to be in 15 years from now and toys are not a necessity.

Everything is all about risk. I don't think that anyone is claiming to be a victim. The owner took a risk of taking a 15 year note, knowing full well that if his income dropped, he wouldn't be able to make payments and the bank would re-possess. On the flip side, the bank took a risk of giving a 15 year note knowing full and well that if his income dropped, they would have to repo the boat..

I wouldn't say that it's stupid to take the loan out. Obviously it costs a lot of money in interest, but if you are OK with giving up the interest, it can work out great. It's just unfortunate that his financial standing changed so abruptly. It just sucks.

to the OP. I have the same hull boat. 350s in each rear locker, stock center ballast, 540 in the bow and a little bit of counterweight on the port side should throw a good wake at 23mph/65feet. Add more weight and run up to around 24.5 and you can load down the rear with 540s in each locker.

to the OP. I have the same hull boat. 350s in each rear locker, stock center ballast, 540 in the bow and a little bit of counterweight on the port side should throw a good wake at 23mph/65feet. Add more weight and run up to around 24.5 and you can load down the rear with 540s in each locker.

As a follow up, I did end up receiving the title in July! The bank waited 60 days to mail it out after payment, and it somehow got lost in the mail, so there was a little bit of a headache. I had the boat the whole time, so it didn't really matter to me much anyways. All in all (registration and tax included), I ended up with a 02 Centurion Hurricane V Drive for 13k. A little elbow grease and shes a beauty! It's been a great summer this year! Since I picked her up, I've done:
- New fuel pump, filter
- Rewired stereo
- Acme 911 prop
- 1200# ballast
- Replaced grips
- Fixed bimini
- Replaced hatch hydraulics
- 100 hr service

This winter I'd like to re-do the upholstery, add Perfect Pass, and plumb the ballast

Sounds like a sweet deal and your friend got to let the boat go to a friend rather than having the bank or debt collectors take it. And it sounds like you went about it carefully and methodically and got a great ride for a killer deal. Love when these threads get updates as to what finally happened.

Sounds like a sweet deal and your friend got to let the boat go to a friend rather than having the bank or debt collectors take it. And it sounds like you went about it carefully and methodically and got a great ride for a killer deal. Love when these threads get updates as to what finally happened.

Yeah, worked out perfect! And my friends (the original owners) are out with us 9 times out of 10. Sweet deal for them, they still get to use the boat but no hassles or money worries!